Is sharing cost on personal vehicles legal?

January 14, 2019

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Ridesharing (or Carpooling, Bikepooling) is one of the noblest idea and at RideAlly, we have been promoting it from year 2013. Thanks to huge traffic and pollution problems (or no thanks), focus of Bengaluru Traffic Police (BTP), Odd-even rule at Delhi, Shared cabs from Ola/Uber and awareness in overall ecosystem, ridesharing has increased in last 1-2 years.

We do see that many of us share our personal vehicles while commuting to office or going for long distances which is great as it helps in reducing traffic/pollution, one makes new friends and overall, journey becomes better. Same time, we see that many vehicle-owners have started earning or sharing cost of fuel (at times, going beyond that), having strangers in their car/bike and assuming that it is ok to share cost on personal vehicles.

At RideAlly, we have always believed in doing what is legal, safe and secure hence we did some research to understand whether sharing cost on personal vehicles is ok or not. If yes, than, how much can be shared? or where to draw the line? If someone is sharing cost on personal/private vehicles than do they need to obtain any kind of license as cabs (or taxis or commercial vehicles) have licensing mechanism.

In our research over long time, we went through Motor Vehicle Act (1988), referred many articles on media, actions taken by RTO, took opinion of social activists, worked with legal deptt of big corporates, formed group of similar carpool companies, participated in committees which represented to central Govt. on ride-sharing guidelines and met Senior Govt. Officials likes of Transport Commissioner and Addl Transport Commissioner at Bengaluru.

What came out was not surprising at all as this is what we have been promoting from long time. Our research concluded that sharing cost (in any form) on private vehicles is illegal as one cannot use personal vehicle for ‘Rewards’. Also, sharing rides with strangers is not advisable as it may construe it as “Hire” and not safe as well.

Please read on if you wish to get absolute clarity on this.

What Motor Vehicle Act (1988) Says

One may refer to Motor Vehicle Act (1988) clauses, like, Section 66(1) on ‘Necessity for permits’, Section 53(1) on ‘Suspension of registration’, Section 75 on ‘Scheme for renting of motor cabs’, Section 192A on ‘Using vehicle without permit’ and Section 207 on ‘Power to detain vehicles used without certificate of registration permit’ for absolute clarity.

All these clauses states that if a motorcab is to be used for hire or reward than it needs to have valid permit. Usually, commercial vehicles (cab, taxi) have such permit and private (or personal) vehicles do not have that. If a motorcab (private vehicle without permit) is engaged in any kind of Hire or Reward activity than their registration can be suspended and appropriate action can be taken.

One should also look at the Section (2) on Definitions of contract carriage (7) and Motorcab (25) to get more understanding. All above clauses are provided in Annexure 1 for your reference.

Meeting with Transport Commissioner, Bengaluru

We met Transport Commissioner, IAS Sri V P Ikkeri and Addl Transport Commissioner, Sri Narendra Holkar in Nov’2018 first week to conclude on our findings. Both mentioned above points in clear terms. We understand that Govt. is looking at all possibilities but Motor Vehicle Act, 1988 section 66(1) currently do not allow any kind of reward from personal vehicles.

We also asked them that whether within a company can they share rides without earning anything and they said that it is fine as laws are being followed.

In nutshell, RideAlly’s approach is perfectly fine as carpooling is ok but earning in any way is prohibited.

Promotion by Bengaluru Traffic Police (BTP)

In Oct’2015, Bengaluru Traffic Police (BTP) promoted carpooling in various tech parks, Radio campaigns, print media and even recommended few carpooling apps including RideAlly however, they remained silent on sharing cost from personal vehicles.

Additional Commissioner of Police (Traffic), Bengaluru, R Hithendra, clarified his stand to press, “Bengaluru Mirror” on 26-Jun-2018 and he said, “We don’t want to fine anyone who gives a lift to someone in need or shares a vehicle. I do not think this could be a commercial activity [here]. In fact, we want to support carpooling in Bengaluru”. The article can be read at, “Bengaluru will never do what Mumbai did — challan a do-gooder“

Odd-Even Rule at Delhi

Delhi Govt. also promoted carpooling during odd-even rule in Jan’2016 and again in Apr’2016 but they too remained silent on cost-sharing or in another words, earning.

Actions by RTO on carpooling vehicles

Recently, RTO has taken many actions on private vehicle owners who are either sharing with strangers or sharing cost on their vehicles. Some examples are below:

It seems that RTO took actions in cities, like, Chennai, Pune etc as well. If one reads the articles, then, the message is clear.

What’s happening on Law front?

To understood the legal implications, we became part of a larger forum, “Tech Mobility Committee” with IAMAI in which Ola, Uber, RapidGo, Shuttl, Zoomcar are also included. The objective was to provide reports on ‘Shared Mobility’ and push for guidelines/clauses on ride-sharing etc. The discussion started in Nov’2016 with few meetings in year 2017 which culminated in 2 reports. One report on, “IAMAI Submission on Promoting Transit Oriented Development (TOD) for Smart Cities” was submitted to Mr. Arvind Sharma at the PMO in Jul-2018 and another report on, “IAMAI submission on Amendments to Motor Vehicles (Amendment) Bill 2017” was submitted to Sri Vinay Sahasrabudhhe and Shri Abhay Damble of MoRTH. Also, Niti Aayog was kept in loop however nothing much came out of it so far.

It is kind of understood that due to elections in May’2019, it may NOT get much attention from cabinet and Govt. officials in year 2019. Same time, transport ministry has clarified that they do not have plans in near future to allow sharing cost on private vehicles. Some media articles are shared below:

As per 3rd article, the amendment suggested in the year 2017 do not even include carpooling related information. In fact, this amendment itself is pending for approval before Parliament.

Conclusion and RideAlly’s stand on the issue

Its abundantly clear that sharing cost or having any kind of reward from private vehicles is illegal as they do not have permit to do so. Carpooling or bikepooling is a must in today’s time however one should avoid any kind of rewards.

RideAlly is continuing with this approach from long time and even trying to educate society. Also, we are working (with Govt.) to bring guidelines on carpooling (due to its obvious benefits) but till it becomes clear, we are NOT planning to allow cost-sharing on our platform. RideAlly has a ready platform from long time for interested carpoolers and bikepoolers and if they wish to share their cars or bikes or get lift, they can do so without sharing cost.

RideAlly would continue to educate upon corporates and communities to not to engage in unethical practices and educate their employees/members to share personal vehicles without sharing cost.

Have a Safe & Secure Travel,RideAlly Team

Annexure 1: Relevant Clauses from Motor Vehicle Act (1988)

Section (2) on Definitions —

(7) “contract carriage” means a motor vehicle which carries a passenger or passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum—

(a) on a time basis, whether or not with reference to any route or distance; or

(b) from one point to another,

and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes—

(i) a maxicab; and

(ii) a motor cab notwithstanding that separate fares are charged for its passengers;

(25) “motorcab” means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward;

66(1) Necessity for permits —

No owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority authorising him the use of the vehicle in that place in the manner in which the vehicle is being used.

53. Suspension of registration —

(1) If any registering authority or other prescribed authority has reason to believe that any motor vehicle within its jurisdiction—

(a) is in such a condition that its use in a public place would constitute a danger to the public, or that it fails to comply with the requirements of this Act or of the rules made thereunder, or

(b) has been, or is being, used for hire or reward without a valid permit for being used as such,

the authority may, after giving the owner an opportunity of making any representation he may wish to make (by sending to the owner a notice by registered post acknowledgement due at his address entered in the certificate of registration), for reasons to be recorded in writing, suspend the certificate of registration of the vehicle —

(i) in any case falling under clause (a), until the defects are rectified to its satisfaction; and

(ii) in any case falling under clause (b), for a period not exceeding four months.

75. Scheme for renting of motor cabs —

(1) The Central Government may, by notification in the Official Gazette, make a scheme for the purpose of regulating the business of renting of [motor cabs or motor cycles to persons desiring to drive either by themselves or through drivers, motor cabs or motor cycles] for their own use and for matters connected therewith.

(2) A scheme made under sub-section (1) may provide for all or any of the following matters, namely:—

(a) licensing of operators under the scheme including grant, renewal and revocation of such licences;

(b) form of application and form of licences and the particulars to be contained therein;

(c) fee to be paid with the application for such licences;

(d) the authorities to which the application shall be made;

(e) condition subject to which such licences may be granted, renewed or revoked;

(f) appeals against orders of refusal to grant or renew such licences and appeals against orders revoking such licences;

(g) conditions subject to which motor cabs may be rented;

(h) maintenance of records and inspection of such records;

(i) such other matters as may be necessary to carry out the purposes of this section.

192A. Using vehicle without permit —

(1) Whoever drives a motor vehicle or causes or allows motor vehicle to be used in contravention of the provisions of sub-section (1) of section 66 or in contravention of any condition of a permit relating to the route on which or the area in which or the purpose for which the vehicle may be used, shall be punishable for the first offence with a fine which may extend to five thousand rupees but shall not be less than two thousand rupees and for any subsequent offence with imprisonment which may extend to one year but shall not be less than three months or with fine which may extend to ten thousand rupees but shall not be less than five thousand rupees or with both:

Provided that the court may for reasons to be recorded, impose a lesser punishment.

(2) Nothing in this section shall apply to the use of a motor vehicle in an emergency for the conveyance of persons suffering from sickness or injury or for the transport of materials for repair or for the transport of food or materials to relieve distress or of medical supplies for a like purpose:

Provided that the person using the vehicle reports about the same to the Regional Transport Authority within seven days from the date of such use.

(3) The court to which an appeal lies from any conviction in respect of an offence of the nature specified in sub-section (1), may set aside or vary any order made by the court below, notwithstanding that no appeal lies against the conviction in connection with which such order was made.

207. Power to detain vehicles used without certificate of registration permit, etc .—

(1) Any police officer or other person authorised in this behalf by the State Government may, if he has reason to believe that a motor vehicle has been or is being used in contravention of the provisions of section 3 or section 4 or section 39 or without the permit required by sub-section (1) of section 66 or in contravention of any condition of such permit relating to the route on which or the area in which or the purpose for which the vehicle may be used, seize and detain the vehicle, in the prescribed manner and for this purpose take or cause to be taken any steps he may consider proper for the temporary safe custody of the vehicle:

Provided that where any such officer or person has reason to believe that a motor vehicle has been or is being used in contravention of section 3 or section 4 or without the permit required by sub-section (1) of section 66 he may, instead of seizing the vehicle, seize the certificate of registration of the vehicle and shall issue an acknowledgment in respect thereof.

One Reply to “Is sharing cost on personal vehicles legal?”

Nice Article with legal articulation.
In Metro we need to allow Cost Sharing + Ride Sharing in Private Vehicles , Limited to 2 rides per vehicle per day , on payment of nominal registration fees by Ride-Sharing app to RTO and cover vehicles registered under them with some sort of Insurance coverage for 3rd party.
We can debate for hours on security and safety concerns , but pollution , traffic jam , productivity loss are bigger concern choking lungs of commuters and causing cancer.
Right time to leverage technology and re-frame rules for Metro at least ….